(4th Cir. 1941), modifying and remanding 41 B.T.A. 910 (1940); Blenheim Co. v. Commissioner, 125 F.2d 906 (4th Cir. 1942), affg. 42 B.T.A. 1248 (1940); and Georday Enterprises v. Commissioner, 126 F.2d 384 (4th Cir. 1942), all disagreed with a reading of Anglo-American as disallowing any limits on late filing.

As the Board of Tax Appeals explained in Taylor Securities:

In view of such a specific prerequisite [that foreign corporate taxpayers file tax returns] it is inconceivable that Congress contemplated by that section that taxpayers could wait indefinitely to file returns and eventually when the respondent determined deficiencies against them they could then by filing returns obtain all the benefits to which they would have been entitled if their returns had been timely filed. Such a construction would put a premium on evasion, since a taxpayer would have nothing to lose by not filing a return as required by statute. [40 B.T.A. at 703-704.]

The Fourth Circuit recognized long ago that Taylor Securities was an innovation. Blenheim, 125 F.2d at 910. It is therefore Taylor Securities, not Anglo-American that was— until today, at least-the controlling preregulation case. And Taylor Securities accommodated the Commissioner's need for some point at which he could assess delinquent taxes owed by a foreign corporation that had failed to file its own return. Taylor Securities and its progeny were precisely the sort of case-by-case development of reasonableness that one would expect in response to the absence of a specific mention of time in section 882.

Where our Opinion leaves the Commissioner after today's ruling is very unclear.9 Current IRS practice, even when the Commissioner prepares a substitute return under section 6020(b), is to encourage nonfilers to prepare and file a return, if for no other reason than to stop the addition to tax for failure to timely file. See sec. 6651(g)(1), (a)(1); In re Rank, 161 Bankr. 406 (N.D. Ohio 1993) (noting number of exceptions to recognition of substitute return, giving taxpayer continuing incentive to file); Saltzman, IRS Practice & Procedure, par. 4.02 (citing examples in Code where taxpayer may file a return after substitute return prepared to chal

9 The majority seems to soften its analysis by suggesting at a couple of points that the Commissioner can still enforce section 882 by again preparing substitute returns. See majority op. pp. 137 note 22, 142. But the Opinion also states that this cannot be an “absolute and rigid rule." Majority op. p. 142 note 28.

lenge Commissioner's determinations). If the majority's hesitance to explicitly overrule Taylor Securities is an endorsement of what was, over 60 years ago, "the generally accepted rule concerning the number of returns which may be filed," majority op. p. 142 note 28, quoting Blenheim, 125 F.2d at 910, it will just cause more confusion given the intervening evolution in the effect of substitute returns.

II.

Having concluded that the plain language of section 882 invalidates the regulation, the majority could have stopped. Instead, as an alternative holding, it goes on to analyze the reasonableness of the regulation under National Muffler— asking whether the regulation "(harmonizes with the plain language of the statute, its origin, and its purpose.)" Majority op. p. 130 (quoting National Muffler, 440 U.S. at 477).

Applying National Muffler, the majority concludes that the regulation is out of tune with the statute not just because it fails to harmonize with section 882's plain language but because the regulation:

• is "not a 'substantially contemporaneous construction of the statute,'

• "merely adopted respondent's unsuccessful litigating position,"

• "conflicts with the agency's previous interpretation of the same statute,"

• had been in effect for only a short time before being challenged,

⚫ was not issued after a revision to section 882, and

• was not relied on by petitioner to his detriment.

See majority op. pp. 136-137.

Each of these statements is at least arguably true-though it seems a stretch to say that a bright-line 18-month grace period is so substantially different from the old reasonabletime-before-letting-the-IRS-bring-the-curtain-down-by-filing-asubstitute-return test as to be in "conflict". And each of the factors the majority cites is concededly relevant in a National Muffler analysis. These counts, though, don't add up to a successful indictment of the regulation's reasonableness. For

what really seems to trouble the majority is that this regulation was promulgated years after section 882 or its predecessor was enacted, and that it disregarded the caselaw that had built up in the meantime. These related issues are the "legislative reenactment" and "Brand X" problems.

A.

According to the majority, the legislative reenactment doctrine means that "Congress is presumed to have known of the administrative and judicial interpretations of a statutory term reenacted without significant change and to have ratified and included that interpretation in the reenacted term." Majority op. pp. 138-139. The majority then marches through the history of the reenactments of section 882-both the great codifications of 1939, 1954, and 1986, and a minor amendment (having nothing to do with the filing requirement) in 1966–before reaching its conclusion that Congress "was mindful of the relevant judicial interpretations and included within the reenacted text the judiciary's interpretation." Majority op. p. 139.

I don't agree that this is right formulation of the legislative reenactment doctrine, at least when it is used to invalidate, rather than uphold, a regulation. In a lengthy discussion of the doctrine, the D.C. Circuit held:

The district court mistakenly relied on the familiar notion that Congress is presumed to be aware of administrative interpretations of a statute or regulation when it adopts such language in a statute. Though courts have stated this general proposition, usually as a defense to a later attack against the same interpretation, no case has rested on this presumption alone as a basis for holding that the statute required that interpretation. *** [AFL-CIO v. Brock, 835 F.2d 912, 916 n.6 (D.C. Cir. 1987).]

Even if we wanted to be pioneers, I am quite leery of the majority's formulation. Elsewhere in Brock, the D.C. Circuit summarized its understanding of the doctrine to require "express congressional approval of an administrative interpretation if it is to be viewed as statutorily mandated." Id. at 915. Other appellate courts have likewise been careful in limiting the doctrine:

• "Mere reenactment is insufficient. It must also appear that Congress expressed approval of the agency interpretation. That is to say, the doctrine applies when Congress indicates

not only an awareness of the administrative view, but also takes an affirmative step to ratify it." Isaacs v. Bowen, 865 F.2d 468, 473 (2d Cir. 1989);

• “When the congressional discussion preceding reenactment makes no reference to the *** regulation, and there is no other evidence to suggest that Congress was even aware of the *** interpretive position[,] 'we consider the *** reenactment to be without significance.'"* * * Am. Bankers Ins. Grp. v. United States, 408 F.3d 1328, 1335-36 (11th Cir. 2005) (quoting Am. Online v. United States, 64 Fed. Cl. 571, 580-581 (2005)).

See also Peoples Fed. Sav. & Loan Association of Sidney v. Commissioner, 948 F.2d 289, 302 (9th Cir. 1991) (doctrine is "most useful in situations where there is some indication that Congress noted or considered the regulations in effect at the time of its action").

The majority's reliance on legislative reenactment should have ended when it could find no affirmative evidence that Congress knew of any of the Fourth Circuit or BTA cases that it describes. The legislative history that the majority quotes and summarizes features only vague references to "existing law." Majority op. p. 141.

Of course, the majority also describes at great length the absence of even a mention of a timely filing requirement in any of the various legislative histories that it pores through. They reason that the absence of any disagreement with the existing BTA and Fourth Circuit precedents shows that Congress intended to ratify those precedents. See majority op. pp. 139-140. This is an innovation. If taken seriously, it would freeze existing judicial constructions and IRS regulations in place whenever Congress reenacted a portion of the Code, forcing us to treat them as if they were part of the statutory language and blocking the Secretary from changing regulations without persuading Congress to change the Code. This cannot be right.

B.

The majority is, I think, also wrong about the amount of deference the Secretary owes to caselaw when he writes a regulation.

This is the Brand X problem. In that case, the FCC had issued a declaratory rule interpreting the term "telecommunications service" under its general authority to enforce the Telecommunications Act of 1934. Brand X, 545 U.S. at 125 S. Ct. 2695. According to this new regulation, broadband cable modems were not a "telecommunication service." This was a change in the law, at least in the Ninth Circuit, because in AT&T Corp. v. Portland, 216 F.3d 871, 880 (9th Cir. 2000), that court had specifically ruled that broadband cable modems were a "telecommunications service."

The Supreme Court began its analysis by citing the FCC's broad grant of regulation-writing power-very similar to the Secretary's in section 7805(a)—of prescribing "such rules and regulations as may be necessary in the public interest." Brand X, 545 U.S. at ___, 125 S. Ct. at 2699. The Court recognized that the regulation did change existing caselaw but reasoned:

A court's prior judicial construction of a statute trumps an agency construction otherwise entitled to Chevron deference only if the prior court decision holds that its construction follows from the unambiguous terms of the statute and thus leaves no room for agency discretion. *** [Id. at 125 S. Ct. at 2700.]

The majority distinguishes Brand X in several ways:

• the FCC gave a more careful consideration of developments in the field than the Secretary did here;

• Brand X did not involve a change in the agency's own interpretation;

• the FCC was not a party in the court case whose holding it was reversing; and

• the FCC's new regulation was promulgated only five years after the contrary caselaw.

Majority op. pp. 143–145.

These distinctions should not make a difference-the Supreme Court did not balance carefulness of consideration, prior litigation history, or the amount of time that had passed between the caselaw and the new regulation. It simply looked to see if the agency had been delegated broad regulatory authority and whether its construction of an